Ha! yes of course.

Hi Bulbasaurus. In most Euro countries the rate is linked to 3 month EURIBOR (if you choose not to fix). This has fluctuated between 4.75% and 4.35% over the last 6 months and is now at the higher end again for the same reasons as LIBOR in the UK.
Huw

savvy, please let me know if you are standing for office anywhere in the UK, as i'll move there and vote for you.

huw, unsure what the 'earlier question' was, but you are right that the answer is probably hungary. what a dog of a market that has been for a couple of years now. surely time for a PS celebratory article explaining why they were right not to push any deals there.

and re UK media reporting on the economy and the housing market in particular: i believe first that all journalists should register their interests as MPs do - are they housing would-be sellers or buyers?. how many are talking down the market because they still have their envious eye on a flat similar to where their banker friends live?

and second, when will a UK newspaper circulation manager come clean about the formula linking bad house price news to increased sales. it must be known.

regards,
dan

As requested

newspaper circulation of Mirror = 2,500,000 + 50,000x(%reduction in houseprices)xno of inches of headline

Thus if Mirror reports house prices have dropped 10% in 2 inch headlines then circulation of Mirror will be 3,500,000

Hope this helps

Regards

Neil

Oh dear savvy,

Oh how wrong you are.

The credit crunch is not a new phenomenom, its all part of the property cycle, of course it was predicted, since it is always the same when there is too much liquidity in the market place - too much debt (too easy to get) = property bubble / exessive borrowing on credit cards / living beyond our means = debt bomb - the cause of the credit crunch.

Cause = Debt bomb
Effect = Credit crunch.

The only thing that is different is the name "Credit Crunch" - a new name for an old problem.

The only difference this time is the SIZE - extent of the problem and how massively over inflated the property market has become, it is quite literally the biggest housing bubble of all time, partly fueled by those dodgy mortgage backed securities that triggered it that finally popped that property bubble, if not that, then it would have been something else.

It was the monetary policy of the fed post Iraqi war that sealed the fate of the US property market. Once that easy monetary policy was put in place the property market was only ever going to boom up until people could borrow no more.

Dont be fooled by the media folks. RECESSIONS ALWAYS FOLLOW HOUSING PRICE CRASHES.

Thus fueling the negative feedback of falling property prices.

Dan W,

Exactly! Hungary has been a dog of a market for the last 3 years. The best time to buy is at the bottom of the property cycle, which was without doubt last year. Sentiment bottomed out last year and will improve throughout 2008 / 2009 and on past EMU 2 entry post 2011.

Buy at the bottom and sell at the top. As it happened the UK and Hungarian property market were perfectly out of sync, whilst UK peaked, Hungary bottomed out.

Hungary was the perfect place to weather the global liquidity crisis, where East meets west, where a drop off of interest from Western countries will be replaced by interest from the East.

One last point (although there are many others) that Budapest is the most undervalued market in any of the EU accession countries - full stop.

Richard I thought that Budapest was oversupplied with flats thus depressing returns - that is the received wisdom

Oversupply of older apartments that nobody wants to live in.

It is true that during the last few years that there has been an oversupply of new apartments and thus prices are low comparitively to other EU capitals.

However, purchasing in good developments with decent developers will do very well over the next few years.

Why?

1. Change in tax rules that is currently devestating disorganised developers.
2. Increased cost of developing due to increases in commodity prices that will result in a 20% rise in prices over the next few years.
3. Hugely reduced development book over the next few years (fewer developement have received planning consent, this will result in a big fall in supply of desireable new build properties).
4. Increased availability of credit (dispite the credit crunch).
5. Local people are purchasing new build.

Refurb properties will have their day ......... just not for the next few years in my view.

As for rental income ....... tends to be between 4-7%. Two bed in a good location would rent for at least 500 Euro per month.

Richard - in the small snapshot of history of buying and selling property in the UK - there is no pattern to suggest anything like what you are talking about.

Just to put this into perspective (as the Chairman of the Council of Lenders said) the UK banks have £1 Trillion of debt secured against £2.5 Trillion worth of assets so it's all about liquidity and not 'Good Debt'. We all know that liquidity is the key to every successful business so it's all about getting the liquidity back into the right places.

When you talk about Property Bubble Richard are you referring to the Capital Value of Property? As any intelligent Property Investor doesn't think about just the Capital Value, there are two cycles that run side by side - Capital Values and Rent Values. If people can't afford to buy they Rent, if they can't afford to Rent they Buy, so those that rent are heading for a peak in the Rental cycle now - the only losers are the Renters, not the Property Investors.

Savvy,

Sure, I am well aware of the cycle by which you speak, but the fact remains that we are investors, in it to make money and not just say afloat.

This is about making the right decisions at the right time. Rental increases are NO WAY going to make up for capital value falls over the next few years.

Being a BTL investor in the UK right now will mean 0 growth if not losses.

The goal of investing is to make a good return on your investment year on year.

Buying in 2007 was essentally like putting money into a low yielding savings account at best, - in real terms a loss making exercise due to monetary inflation and property deflation.

NO thank you, - easy to find a better investment with a nice 20% return - minimum.

There is plenty of evidence for what I say, but I dont think this is about that; but rather, - you speak as someone invested in the UK BTL market who is still grasping at straws - hoping that everything I say is wrong (contrary to the evidence). Oh, and you seem to have missed the golden opportunity to sell your UK portfolio in 2006/2007 and now have to watch as prices spiral downwards, - all the time thinking that you will make your investment good by just holding on ...... 5 years it will all be good.

And yes, it might all come good ........ in 5 years. Money invested ..... ANYWHERE will likely out perform UK property in general terms. We all know that there are exceptions, but lets face it finding those exceptions has gotten alot harder and why take that increased risk?

Holding onto property in 2007 was a far riskier senario than selling and buying into the Hungarian market when I did, since the Hungarian property market / sentiment had already hit bottom, thus the only way is up.